ANOTHER $1.6BN IN WRITEOFFS AT AMBAC, SHARES DIVE

New York-based bond insurer Ambac has reported another $1.6bn in losses from derivatives after credit quality worsened at second-lien and “Alt-A” mortgage-backed securities. The additional deterioration brings statutory writedowns on a credit derivatives portfolio of Ambac Assurance to $4.9bn. In a separate move, Ambac said that it would stop paying interest on some subordinated debt and dividends so that it can conserve cash. Ambac’s shares fell by nearly 25% to $0.72 in after-hours trading. The company’s plan to create a new “clean” municipal bond insurer called Everspan had to be shelved last month after it failed to raise sufficient capital from investors. Essentially the bond insurer has not been able to write any new business because of its mortgage-related losses. Ambac said that it did not intend to issue an update on its financial position before it reports its H1 results on August 5.